Summary of Submissions - Real Estate Agents Authority

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no section dedicated to this rule in this document. Rule Four: Interpretation 12 The consultation document contained a number of suggestions in relation to the proposals to define client, land and questions about how to define prospective client. One submitter contended that the Code of Conduct should not define anything that is not already defined in the Act in order to avoid acting ultra vires. 13 Some submitters considered that it is unnecessary to define either client or land as they are defined in the Act. Others supported the addition of these definitions into the Code of Conduct. One submitter, while supportive in principle, warned of the risks related to making amendments to the Act which do then not flow through to the Code of Conduct. 14 One submitter suggested implementing internationally consistent terms and definitions. 15 Submitters suggested the following additional definitions. • Agent (with a capital A to designate licensee who hold an Agents licence) • agency agreement • branch manager • sole agency agreement. Rule Five: Standards of professional competence 16 The consultation document proposed a change to rule Five that would see explicit inclusion of consumer protection law in rule 5.2 with a footnote referencing the Fair Trading Act, Consumer Guarantees Act and the Contractual Remedies Act. 17 Submitters predominantly focussed their comments on the consultation document’s questions in relation to emphasising consumer protection law. Three submitters supported the proposed change to reference consumer law and in particular the Fair Trading Act, Consumer Guarantees Act and the Contractual Remedies Act. Others supported the principle of better emphasising the importance of wider consumer protection law, but were concerned that listing some specific statutes may lead to licensees focussing their attention on those laws when there are other aspects of consumer law which licensees may breach. 18 One late submission also considered recent Tribunal cases and decisions and proposed that rule 5.1 should be amended to provide that, where there are legal or technical issues in relation to land or a business, it should be sufficient for the licensee to recommend that the customer or client take expert or legal advice. Code of Conduct Summary of Submissions June 2012 Page 4 of 12
Rule Six: Standards of professional conduct 19 The consultation document suggested amendments to the code to: • require licensees to inform customers of their fiduciary obligations to their client • move rule 6.5 into new rule 10 20 The consultation document also asked whether rule 6.5 should be amended to require a licensee to both obtain confirmation from their client that there are no defects and inform customers of significant potential risks. 21 A number of submitters commented on the proposed changes in relation to requiring a licensee to inform customers of their fiduciary duty to clients and moving rule 6.5. 22 One submitter included a suggestion that rule six should include a provision that client money must be held separately from other monies and be covered by adequate insurance. Disclosure to customers of fiduciary duty 23 Of the submitters that commented on this issue only one was supportive. This submitter considered that New Zealand needed to ensure that more information is provided to match international best practice. One submitter questioned when a licensee should be required to inform customers in order to discharge this duty. 24 The submitters that opposed this proposal contended that the Authority’s approved guides already inform customers of the licensees relationship with their client, one considered that all people realise who is paying the agent and another that this proposal would create more confusion rather than clarity. Disclosure of defects (rule 6.5) 25 The consultation document included a proposal to move rule 6.5 from rule six to new rule 10 and a question about whether both of the sub-paragraphs should be retained. Submitters provided a number of comments on rule 6.5 including: • that rule 6.5 needs to be significantly reworded • the ‘know or should know’ test should be replaced by a reasonable person test • that rule 6.5 should require written confirmation from sellers about defects • that rule 6.5 should remain in rule six and not be moved. 26 One submitter suggested that rule 6.5 should use the term ‘property’ instead of land to reflect that the use of the term in the rule is broader than a common understanding of the word land. 27 Another submitter advised that in the rural setting what constitutes a ‘defect’ can be difficult. The proposed use by buyer often impacts on whether there are ‘defects’ (e.g. different farming requires different water requirements). Customers routinely do not disclose their intended use of the property as it can affect the price that they would have to pay. However, this submitter considered that the current wording of rule 6.5 was adequate and worked in rural practice. Code of Conduct Summary of Submissions June 2012 Page 5 of 12
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Summary of Submissions - Real Estate Agents Authority

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